 Demand shocks and price stickiness in housing market dynamicsYing Fan Economic Modelling, 2022, vol. 110, issue C Abstract: The current study establishes a dynamic stochastic general equilibrium model with sticky housing prices and compares the heterogeneous macro effects of exogenous uncertainty shocks on housing market dynamics in China. Based on Bayesian estimation, the findings indicate that 1) intertemporal/intratemporal preference and liquidity constraint shocks significantly affect housing market dynamics through different channels; 2) macro effects of demand shocks exhibit frequency-domain dependence, thereby suggesting the crucial role of stickiness; and 3) housing price stickiness significantly exacerbates fluctuation and postpones the convergence of housing markets under demand shocks, particularly in the post-crisis period; additionally, it asserts an asymmetric effect in booming and cooling markets. Furthermore, the counterfactual analysis provides policy suggestions to correct the housing market dynamics associated with demand shocks and price stickiness. Keywords: Demand shock; Sticky housing price; Frequency dependence; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:110:y:2022:i:c:s0264999322000669 DOI: 10.1016/j.econmod.2022.105820 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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